State considers fixes to school finance

Following a Texas Supreme Court ruling in May that upheld the constitutionality of the school finance system, lawmakers are examining several ways to revise the funding structure, which the court called an “ossified regime ill-suited for 21st century Texas.”

The House committees on appropriations and public education held joint hearings in late September on interim charges related to the finance system, including “hold harmless” funding, facilities funding, and recapture.

Recapture is the wealth equalization feature of the school finance system enacted in 1993 to address a Texas Supreme Court ruling that said disparities in local property tax revenue between property-wealthy and property-poor districts violated the constitutional efficiency requirement. The House speaker has charged the committees with recommending ways to reverse the increasing reliance on recapture payments to fund public education statewide.

The Legislative Budget Board told lawmakers that the amount of recaptured revenue has grown from $1.2 billion in fiscal year 2014 to a projected $2 billion in fiscal year 2017 as property values have increased. As a percentage of the finance system as a whole, the LBB said, recapture revenue has remained in the 3 percent to 5 percent range over the past 12 years.

For more information about the history of school finance litigation, the most recent Supreme Court ruling, and interim charges related to education funding, see the recent House Research Organization focus report, Texas School Finance System Survives Latest Supreme Court Review.

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